Southwest’s (LUV) airline peers utilize a hub-and-spoke approach which concentrates most of their operations at a limited number of central hub cities that serve most other destinations in the system by providing one-stop or connecting service through a hub. In contrast, Southwest offers point-to-point route structure which allows for more direct nonstop flights than hub-and-spoke service.

Direct nonstop service— as well as servicing second tier airports and utilizing a single airplane type— have helped differentiate Southwest from competitors. However, the company’s 2020 10-K reveals the pandemic forced it to, in part, mimic its rivals:

“However, in response to the effects of the COVID-19 pandemic, the Company placed greater reliance in 2020 on connecting traffic in an effort to capture Customer demand.”

Southwest discloses that approximately 72 percent of its customers flew nonstop during 2020 versus 77 percent during 2019. Similarly, at year end 2020, Southwest served 667 nonstop city pairs compared with 720 as of December 31, 2019.

The shift in strategy was out of necessity. Despite temporarily mimicking competitors, don’t expect Southwest to abandon its point-to-point route structure as the company continues to credit the model for allowing it to offer frequent, conveniently timed flights, and low fares.

Separately, executives regularly mention pent up demand as a driver in the airline recovery story. But Southwest argues new airline competitors have emerged— think Zoom (ZM)— and may have already inflicted permanent damage. When identifying other forms of competition in its 2019 annual report, Southwest leads with those that are top of mind:

“The airline industry is subject to varying degrees of competition from other forms of transportation, including surface transportation by automobiles, buses, and trains.”

Though it later mentions the internet and video conferencing, Southwest leads its “Other Competition” section in the 2020 10-K with digital competitors:

“Technology advancements have provided alternatives to air travel, such as videoconferencing, business communication platforms, and the Internet, and these alternatives have significantly increased in scope during the COVID-19 pandemic. The Company is subject to the risk that the significantly increased use of these alternatives could result in permanent changes to consumer behavior and thereby negatively affect demand for air travel.”

Southwest mentions “business communication platforms” several more times in the filing. If business travel does not return to pre-pandemic levels, Warren Buffett’s decision to sell the airlines may ultimately be perceived more favorably than it was after the Federal Reserve acted and airline stocks made significant recoveries.

Lastly, organizations focused on ROIC— and tie it to executive compensation— outperform their peers that focus on vanity metrics. Historically, Southwest provided investors with its ROIC each quarter so investors could judge management’s performance based on the capital invested. Due to the pandemic’s impact on business, Southwest revealed it has stopped providing ROIC.

In the annual report, Southwest acknowledges it may never provide ROIC to investors again:

“As a result, management ceased focus on ROIC and instead has since focused on bolstering the Company’s liquidity through cost reductions, financings, sale-leaseback transactions, and securities offerings. Accordingly, the Company has chosen not to present ROIC in this Form 10-K and does not expect to present it again until and if the operating environment normalizes sufficiently to return the Company to operating income instead of operating loss.”

Southwest expects to burn between $10-$15 million per day in the first quarter of 2021. To stop burning cash, Southwest estimates traffic will gave to rebound to nearly two thirds of 2019 levels: